Oil rebounds on Iran strikes as markets eye PCE inflation data

Oil futures climbed more than 3 percent Thursday after U.S. forces struck an Iranian military site and Tehran reported retaliatory action near an American airbase. Brent crude reached $97.16 a barrel while West Texas Intermediate traded at $91.43, both benchmarks posting gains that reversed the previous session's declines. Traders linked the move to renewed worries over supply routes through the Strait of Hormuz, a narrow waterway that carries a large share of global oil shipments.

The latest American strikes targeted facilities viewed as threats to both U.S. personnel and commercial traffic, according to officials cited by Reuters. Iranian state media said Revolutionary Guard units responded by firing on an unspecified U.S. airbase shortly after 4:50 a.m. local time. Separately, U.S. forces reported downing several Iranian drones during the exchange. These developments followed earlier statements from Secretary of State Marco Rubio that talks with Iran had shown some progress, though President Trump made clear that any agreement would not cede control of the strait to Tehran.

Market reaction extended beyond energy contracts. S&P 500 futures fell 0.2 percent in early trading, with Nasdaq 100 contracts down 0.3 percent. The Dow Jones Industrial Average futures shed 62 points. Analysts noted that the prior day's record close for the Dow had been supported by a temporary drop in oil prices after Rubio's comments on negotiations. The rebound in crude reversed that relief and left equity traders focused on Thursday's upcoming inflation data.

Federal Reserve Bank of Chicago President Austan Goolsbee told CNBC that energy-driven inflation has proved more stubborn than futures markets initially projected. Prices remain well above pre-conflict levels of roughly $72 for Brent and $67 for West Texas Intermediate. Because many Asian economies rely heavily on imported energy, Goolsbee described the situation as a classic stagflationary shock rather than a temporary supply hiccup. He reiterated his earlier dissent against the Fed's final 2025 rate cut, arguing that evidence at the time did not support the view that inflation pressures would fade quickly.

Citi analysts had noted in a late Wednesday report that markets appeared to be pricing out extreme disruption scenarios as Washington and Tehran edged toward talks. Yet the bank also warned that uncertainty over any deal's timing could keep central banks cautious about easing policy further. Higher energy costs, the note added, were already feeding into broader price pressures through secondary channels.

The pattern fits repeated historical episodes in which military confrontations in oil-producing regions generate sustained price increases that outlast initial forecasts. Consumers and businesses absorb those costs through higher transportation and production expenses, effects that compound when monetary authorities must weigh additional inflation risks. Markets continue to register these developments through futures prices and equity moves, reflecting the direct economic consequences rather than diplomatic rhetoric.